The appeal of Microsoft as an investment was meant to be the company's enormous base of installed users. Even if only 80% of the Windows population bought the next version of the software, the cash flows would be immense. That cash could then be used to buy back shares. It wasn't the world's most exciting strategy but it sounded safe enough.

Buying Skype, coupled with the alliance with Nokia, takes Microsoft in a new multimedia direction. "We are a super-ambitious company," explained chief executive Steve Ballmer. Super-ambitious is certainly a fair description of the price being paid for Skype – $8.5bn (£5.2bn) is 10 times last year's revenues for a company that made a loss of $7m.

Bubble 2.0, they call it in the US. Microsoft's shareholders would surely prefer more buy-backs to this belated rush to join the frenzy for overpriced technology companies.